BUSINESS ADMINISTRATION
INTERNATIONAL MARKETING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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meet the deficiencies in the reserves account of the foreign country
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create a positive balance of payments for the foreign producer’s country
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abide by the voluntary export restriction agreement
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overcome antidumping laws
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undermine the competition and take control of the market
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Detailed explanation-1: -The traditional theory of predatory pricing is straightforward. The predator, already a dominant firm, sets its prices so low for a sufficient period of time that its competitors leave the market and others are deterred from entering.
Detailed explanation-2: -In a predatory pricing scheme, prices are set unrealistically low in order to eliminate competitors and create a monopoly. Consumers benefit from lower prices in the short term but suffer in the long term as the successful predator has eliminated choice and is free to raise prices.
Detailed explanation-3: -(b) “predatory price” means the sale of goods or provision of services, at a price which is below the cost, as may be determined by regulations, of production of the goods or provision of services, with a view to reduce competition or eliminate the competitors.
Detailed explanation-4: -A prime example of predatory pricing tactics between two large franchises can be seen in the prescription drug price war between Walmart and Target in Minnesota. Walmart, seeking to undercut the competition, initially began offering certain prescription drugs at well below their price floor.